Australian Greens leader Christine Milne said it would be welcome, if difficult, news for thousands of Australians.

"I hope this can bring some peace and justice to shattered lives, lift the shadow off all those good people in the church striving to do good for others, and make sure nothing like this ever happens again," she said in a statement this evening.

Bravehearts founder Hetty Johnston welcomed the announcement of a wide-ranging powerful inquiry into institutional responses to allegations of child abuse.

She says the issues are endemic, and sweeping powers are critical if the inquiry is to succeed.

"The Royal Commission needs to include not only the churches," Ms Johnston told AAP.

Pressure is mounting for Julia Gillard to launch a royal commission into child sex abuse in the Catholic Church

"It needs to include family and other courts, government organisations and other institutions, anybody who who has a duty of care."

But it is also vital, she said, for retrospective legislation to be passed urgently to make the destruction of documents illegal.

"Perhaps some of these organisations will be madly shredding documents as we speak.

"The parliamentarians need to put it out there that retrospective legislation will be introduced that makes the shredding of documents illegal and that people will face consequences for destroying evidence."

Ms Johnston said today's announcement would have caught some institutions off guard.

"I'd like to make sure the evidence is maintained intact," she said.

The declaration of the Royal Commission is, she believes, a watershed in our history.

"We are a nation that should be proud of ourselves today, I don't know that any other country has done it like this and certainly not with such strong bipartisan support.

"One in five Australian children, 59,000 of our children, are sexually assaulted every year - more than most football stadiums can hold.

"We are well past due this ... and I'm incredibly proud we have a parliament that has the backbone to stand up for our kids. It's really exciting."

The Brotherhood of St Laurence said a royal commission into child sexual abuse is long overdue and it hopes it will bring crimes committed against children out into the open.

The Brotherhood's executive director Tony Nicholson said it's obscene that institutions have covered up their crimes for decades.

Mr Nicholson said it's important the terms of reference, still to be announced by the prime minister, are comprehensive.

The reach of the national inquiry will be vast and the Government expects it to take a considerable time to conclude after starting in the New Year.

Ms Gillard said she also wanted to take her time to form the terms of reference for the royal commission.

"I want to take the time to get this right," she said.

"So over the next few weeks we will be consulting with the organisations that represent the survivors of child abuse, with religious organisations, with state and territory government to ensure the terms of reference are right."

No one has been selected as a royal commissioner.

The Prime Minister said there had been too many instances of adults averting their eyes from the abuses and that she was determined that institutions would no longer fail to respond.

She said the focus would be on institutional responses to abuse reports, including those of police.

"There is also, I believe, cause for concern that other adults who could have done something to make a difference to the lives of these children didn't do what they should have," the Prime Minister said.

"Either by becoming complicit in children being moved around for example, or by averting their eyes by acts of omission.

"I think we have to learn the lessons about how institutions can best respond when there are allegations of abuse."

The inquiry would cover children in state care, under the care of all religious organisations, and those looked after by private groups and schools. It was still not clear whether issues of compensation would be considered.

Ms Gillard said the terms of reference would be drawn up after discussions with religious groups, state leaders and the victims of abuse.

The Prime Minister said she had spoken to Catholic Cardinal George Pell who had been "most co-operative".

She said a royal commission offered "the broadest sweep of potentials for the working of the commission". "That's why I've chosen it."

She said they needed to ensure the royal commission process did not end up holding up prosecutions that may be under way.

Ms Gillard gave no timeframe for the inquiry but said it would take some time.

"It should take the time necessary," she said.

Ms Gillard said she had already spoken to the premiers of NSW and Victoria, states which are already pursuing their own inquiries.

"Both of them are prepared to take a cooperative approach," she said.

Premier Barry O’Farrell has already set up a Special Commission of Inquiry into allegations involving alleged paedophilia involving the Catholic Church in the Hunter.

Ms Gillard made the announcement after senior NSW police officer Peter Fox broke his silence over an alleged cover-up of a pedophile network inside the Catholic Church.

Earlier, Opposition Leader Tony Abbott backed a Royal Commission into child sexual abuse as long as it was not limited to a single institution.

He said in a statement that "if the government were to propose a royal commission to investigate the sexual abuse of children, it is something the Coalition would be prepared to support".

Detective Chief Inspector Fox, the “hero” who spearheaded the push for a Royal Commission into child sexual abuse in the Catholic Church, today welcomed Mr Abbott’s support as a “magnificent gesture”.

“My God, (Cardinal) George Pell’s best mate!” he said.

“Whether I’m an Abbott fan or not… I really wasn’t counting on his support but now that he’s backing the Royal Commission that will probably change my mind about him a helluva lot.”

His revelations about priest paedophiles and coverups have fuelled the push for a Commission, with politicians from all parties (including former Labor PM Kevin Rudd and former Liberal PM Malcolm Fraser) supporting the idea.

Det Chief Insp Fox, a senior investigator who spent decades unearthing evidence of abuse, said he welcomed the support and felt that the movement was “on a real roll” but said he would not relax until it was in the bag.

“I’m never going to allow myself to relax until we have (a Commission) for certain,” he said.

“This isn’t just now it’s been going on… people have been plotting this for 15 years. It’s looking more promising now than at any time in the past but I won’t take it for granted until it’s stamped and done.”

Government Whip Joel Fitzgibbon also demanded a Royal Commission in the interests of "the victims, their families and the Catholic Church".

Nicky Davis from the Survivors Network of those Abused by Priests said her first reaction to the announcement was to hug her son and sob with joy.

"Our suffering is being recognised, our voices are being heard and this is a wonderful thing," she told ABC television.

Victims wouldn't be able to heal while the truth was covered up, Ms Davis said.

She urged the prime minister to ensure that victims' voices were heard when the commission's terms of reference were put together.

"We are the experts in how they managed to get away with this for so long," she said.

The process

Prime Minister Julia Gillard will recommend to the Governor-General a Royal Commission be set up.

Itwill inquire into institutional responses to instances and allegations of child sexual abuse in Australia.

The terms of reference will be worked out in coming weeks with a view to the commission being established before the end of 2012.

Attorney-General Nicola Roxon and acting minister for families Brendan O'Connor will co-ordinate work on the terms of reference.

The inquiry commissioner or commissioners will be named in coming weeks.

Ms Gillard plans to speak to state and territory leaders in coming days about how the Royal Commission may relate to current or proposed inquiries in their jurisdictions.

Discussions will also be held with victims' groups, religious leaders and community organisations.

The inquiry will look at religious institutions, state institutions and schools and not-for-profit groups like scouts and sports clubs.

The government says the commission is not targeted at any one church.

It's too early to say how long it will take.

Royal Commissions

There have been 129 Royal Commissions appointed by the government of Australia since 1902.

The last, in 2008, was into equine influenza.

A Royal Commission has considerable powers, albeit restricted to its terms of reference.

It can compel witnesses, offer indemnities and seize documents.

The Costigan Royal Commission on the Activities of the Federated Ship Painters and Dockers Union and the Royal Commission into Aboriginal Deaths in Custody each lasted four years.

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